Anonyman writes in an email: "Although senate staffers may not know who ayn rand is, they believe that JtP has genuine wisdom to impart..."

Well, the problem is that Ayn Rand, and John Maynard Keynes, and all those silly intellectuals, wrote books and used big words. JtP is a little easier to follow, so his "Tent of followers" is more commodious.*

(*Absolutely, yes, that was a potty joke. You bet it was. Commodious. I've got a MILLION of them.)

"I shall argue that in ideal circumstances, randomized evaluations of projects are useful for obtaining a convincing estimate of the average effect of a program or project. The price for this success is a focus that is too narrow to tell us “what works” in development, to design policy, or to advance scientific knowledge about development processes. Project evaluation using randomized controlled trials is unlikely to discover the elusive keys to development, nor to be the basis for a cumulative research program that might progressively lead to a better understanding of development."

"This argument applies a fortiori to instrumental variables strategies that are aimed atgenerating quasi-experiments; the value of econometric methods cannot be assessed byhow closely they approximate randomized controlled trials. Following Cartwright (2007a, b), I argue that evidence from randomized controlled trials has no special priority. Randomization is not a gold standard because “there is no gold standard,” Cartwright (2007a.) Randomized controlled trials cannot automatically trump other evidence, they do not occupy any special place in some hierarchy of evidence, nor does it make sense to refer to them as “hard” while other methods are “soft”. These rhetorical devices are just that; a metaphor is not an argument."

Friday, February 06, 2009

Leef: President Obama and his circle of advisers are all well-educated people, yet they support economic policies that seem to be deeply flawed. Would you say that they simply haven’t read the right books and taken the right courses to comprehend what’s going on, or is the problem that politicians sometimes pursue objectives other than long-run prosperity for the general public?

Munger: President Obama is no worse than George Bush, and he actually may be quite a bit better. George Bush is the one who ran the huge deficits, and who allowed enormous discretionary spending increases and increases in domestic regulation.

The problem is this: It’s hard to claim credit for the vitality of the market. Politicians claim credit for DOING things.

Imagine you had a six-year-old daughter, and that she has a high fever. It’s 1820, and we don’t understand germs or fevers very well. You call the doctor, and the doctor comes to the house. “Please, do something. DO SOMETHING, and help my daughter,” you say.

The doctor takes out a lancet, and makes a small incision in your daughter’s wrist. The theory was that the fever was in the blood itself, and “bleeding” was the only treatment that people in 1820 knew.

It doesn’t work. Your daughter’s fever is still very high. So, you tell the doctor, “DO SOMETHING! You are the doctor.”

The doctor bleeds her some more. And she dies.

And the next day you blame the doctor for not bleeding her MORE and SOONER. But bleeding was the wrong thing to do.

This stimulus is the wrong thing to do. The fact that the first round didn’t work leads me to think we need to stop! But all the desperate economic parents out there say, DO IT MORE! DO IT LONGER! DO IT FAST!

I don’t blame the President. I blame voters, who have the naïve idea that government is responsible for the economy.

....but rather they are haunted by the fact that you might think they are dumb. No, really! It says pretty much that in a new NBER working paper (ungated version here) by Thomas Dee.

The paper employs the concept of a stereotype threat:

"Stereotype threat refers to the perceived risk of confi rming, through one's behav-ior or outcomes, negative stereotypes that are held about one's social identity.More specifi cally, its key conjecture is that the threat of being viewed throughthe lens of a negative stereotype can create an anxiety that disrupts cognitiveperformance and influences outcomes and behaviors"

Yes, I believe this can happen especially with respect to race and gender, but with football players??

However, Dee presents experimental results where student athletes who were reminded that they are indeed student athletes before taking a test do worse than those who were not so reminded:

"The key results from estimating this model are reported in Table 4. The full-sample results indicate that the unique effect of the treatment on athletes (i.e.,the estimate of ) on athletes was uniformly negative and implied reductionsin test performance ranging from 7.3 to 9.5 percentage points."

Yesterday we had a caller who pointed out that Barack Obama apparently has a secret, but highly effective, plan to balance the federal budget, and to finance even the huge Porkulus bill, all without increasing the deficit.

The plan?

Appoint, one after another, all the rich liberals in the country who think spending tax dollars is cool, but that actually PAYING taxes is for chumps.

It's a beauty solution. Consider.

1. None of the people Obama hangs with appear to have paid taxes in decades. They make tons of money, though.2. Appointing them forces these tax cheats to come out and admit their wicked ways, and to pay their back taxes.3. Then, they don't actually get appointed, b/c they are too embarrassed. The office stays vacant.4. So, Obama can appoint ANOTHER tax cheat to the same office, and the cycle begins again.5. The revenue rolls in, so Nancy Pelosi can use the money to finance birth control conselling for pet hamsters, digitizing veterinary records, and other important things.

I humbly thank that caller. A fundamental insight into the mind of Obama.

"President Barack Obama warned on Thursday that failure to pass an economic recovery package could plunge the nation into an even longer, perhaps irreversible recession, as senators searched for compromises to whittle down the enormous bill.

Senate moderates gathered behind closed doors in an effort to find at least $50 billion in spending reductions that might make the $900 billion-plus package more palatable to centrists. Democratic leaders hoped to pass the legislation by Friday at the latest.

Obama painted a bleak picture if lawmakers do nothing.

In an op-ed piece in The Washington Post, the president argued that each day without his stimulus package, Americans lose more jobs, savings and homes. His message came as congressional leaders struggle to control the huge stimulus bill that's been growing larger by the day in the Senate. The addition of a new tax break for homebuyers Wednesday evening sent the price tag well past $900 billion.

"This recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse," Obama wrote in the newspaper piece."

People, an irreversible recession means that GDP will shrink to zero and the USA will cease to exist. Can it really be that Porkulus is the only thing standing between us and extinction?

If we keep the financial system afloat and the Fed keeps up "quantitative easing" then I think the recession will be reversed absent any fiscal stimulus. Now it might be a long time and a good timely stimulus might well help reduce that time which would be excellent if it's long run effects were not worse than the short run benefit. But, this bill is an ugly mixed up mess of stimulus, Obama initiatives, and political pandering. It's not the only thing between us and the abyss.

Oh, and the pandering is not only on the Democratic side. The Republican idea of tax breaks for new home buyers and interest rate subsidies for homeowners as a way of trying to raise housing prices is borderline insane as Ed Glaeser eloquently argues in today's WSJ.

This recession is going to hurt no matter what because of the collapse in housing wealth and the necessary reallocation of people and capital to other sectors.

When I was a young assistant prof. at George Mason, we were considering making an offer to someone and the faculty voted not to extend it. Apparently some people were not happy with this result as a couple days later we had another faculty meeting to vote on exactly the same issue. I asked Bob Tollison (the second ball hogging-est social scientist ever) what was up and he told me "we are going to keep voting until we get it right!"

That appears now to be the case in Venezuela. Voters have already rejected a comprehensive constitutional reform that allowed unlimited reelection of the President. Now they are voting again on the 15th in a referendum that is only about unlimited reelection (of the President and also other politicians this time). Even before this vote has been taken though, Chavez has warned the world that another "no" won't necessarily mean "no" to him. That is to say, he plans to put the issue to another vote if this one fails!

According to the AP: Chavez says "there's no limit in the constitution regarding the number of times that an amendment can be attempted."

"Then, on a 52 to 45 vote, the chamber stripped $246 million in tax breaks for Hollywood production companies, a measure offered by Sen. Tom Coburn (R-Okla.), the Senate's self-appointed watchdog on federal spending. Coburn, who almost always loses his quixotic efforts to cut funding, appeared jubilant -- if somewhat surprised -- by his unexpected victory."

"This is a gift," he said of the Hollywood provision. "It's not going to stimulate the economy at all."

Tuesday, February 03, 2009

Oh, sure, she seems nice. She is a veterinarian, took a MA in biology before vet school, interested in research.

Now, she sails and spends a lot of time outside near her home in Portland, Oregon. She and her husband Mark have two kids.

But it turns out she is pure evil. I don't mean like Hillary Clinton professional level pure evil. But on an amateur scale.....pretty darned evil.

She sends our Christmas present a bit late (we received it February 2). It comes in a nice box, a collection of homemade stuff, including some jam and some really great Japanese tea.

And, the following two items, wrapped carefully in Saran wrap and then wrapped in tissue paper.Now...I could have read the card, or the Year-in-Review summary letter, in the box.

But I was feeling a bit peckish. And since this was clearly a nice piece of hard goat cheese (on the left) and some kind of lemon bar (on the right) I decided to have a big taste. (In my defense, I have two teenage sons. Food tends not to last on our counter. In fact, food tends not even to TOUCH our counter for more than three or four seconds without being engulfed.)

I took a bite out of the goat cheese (you can see the bite marks on the front edge). And thought, "Wow, that's really strong. Smoky and bitter and....OMIGOD! That's soap!"

To be fair, Kathy did confirm in the card that she was including two pieces of olive oil-based soap, and she hoped we enjoyed it.

Thanks, Kath.

UPDATE: As I was writing this just now, I heard the door slam. The younger younger Munger had come in, and had picked up the soap and was about to take a bite. But I warned him not to. It's mine. I'm going to put it on crackers later.

Don't think Josh learned much from me, though. He was always pretty advanced.

Excerpt:

The modern Internet bears little resemblance to the Internet you experimented with in cycles past. Change is happening so quickly that half of what a four- year technical student learns their freshman year is outdated by their junior year. There were as many Google searches in the last two months of the 2008 cycle as there were in the entire two years of the 2006 cycle.

In 2008, both Harris and Pew reported that more than 80 percent of adults are regular Internet users, and according to an IDC report, the average Internet user spends nearly twice as much time online as they do watching television. Digital advertising will not replace television any time soon, but the huge chunk of us who are exposed to digital ads are the same people who have TiVo, so it’s time to take this inventory seriously. Some have. This cycle the savviest campaigns used search, context and display advertising for acquisition, by putting donation and e-mail sign-up appeals in front of people interested in their race. Unfortunately, this acquisition model is limited because it only grabs the “low- hanging fruit.”

Thanks to Democrat Al Franken’s Senate campaign, we now have a proven model to move beyond these strategies. We do it by tapping into the concept of the “long tail,” an Internet marketing theory popular in the corporate world. It’s based on the idea that the Internet audience is extremely fractured. So, instead of identifying the most universally persuasive messages and broadcasting them to a wide audience, in the long-tail model you take the most persuasive messages and nanotarget each one to the right niche.

The Mayor follows up his earlier description with more details. This was something the state sent out to the municipalities in his state.

While still very much a moving target, it looks clear that the [area] will be allocated some federal funds as part of the 2009 stimulus bill. I’ve heard a wide range of numbers. If the present language of the bill holds, it would be 100% federal share (no match required).

The first round looks to have a requirement that the funds are put under contract within 90 days of the bill being signed into law. Failure to put the funds under contract in 90 days would result in giving the funds back. This means only mature projects that either have or are very near environmental clearance and have the design mostly done (or perhaps a candidate for a design/build approach). The following projects from the [area] are the only ones that have any chance of meeting this criteria: [List]

The purpose of this meeting will be to discuss options and possibly decide on a conceptual approach for the [area] in anticipation of the bill. This meeting will invite representatives from jurisdictions with possible eligible projects. Ultimately, the full [area] board would need to amend the TIP, most likely at a early March Executive Council Meeting. However, with the accelerated schedule that comes with these funds, we cannot wait until then to decide on an approach. I’ve public noticed all the projects listed above as possibilities for a TIP amendment for additional federal funds. We have a 30 day public comment period.

The bill might end up including a second round of stimulus funds. Remaining funds from states that are unable to spend their funds will be reallocated to states and MPO’s that have eligible projects. The time-frame for spending those funds will be longer. We should have more time to gear up for the second round.

Reminds of the country song: "Let's Do Someting, Baby, Even If It's Wrong"

"You knew when you were eight years old and you saw say for example that there was a villain named Skeletor: you said to yourself, "I bet that is a badass villain because how is he not going to be with a name like Skeletor," and even though he could not quite serve up the whoop-ass to some chump named He-Man like you might have expected given the severe disparity on the Coolness of Names scale, you had a definite hunch that really the game was rigged: and that if the writers of the show had actually described reality instead of some good-guys-rule universe, there would only have been one battle between the two, one which ended quickly and bloodily, after which a barely-winded Skeletor might be seen chewing the gristle from one of He-Man's detached legs while a still-breathing He-Man looked up in horror from the burnt ground on which he lay. You can't judge a book by its cover but judging it by its name is a little different."

"So it is that when I heard there's a band called Vulture Whale I said to myself "self-fulfilling prophecies be damned, a band called Vulture Whale has gotta kick ass." And indeed my brethren the shit is live. They sound like Silkworm. Then after a while they sound kind of like the 3Ds a little. Mainly though there is a heavy Silkworm injection here. That is 100% OK by me. There should be more bands who sound like Silkworm and less who sound like they think they have something original to contribute to the field of Rocking Dionysiac Abandon. That shit is straight played out, man. Vulture Whale is not played out. They groove like Silkworm and I, for one, will take it.

Monday, February 02, 2009

"We can go down in history as the generation that created the Great Depression of the Noughties. Just keep on beating the protectionist drums. Keep on the footdragging that prevents effective qualitative and quantitative monetary policy easing in the Eurozone and the UK. And go ahead with unsustainable fiscal stimuli in the US, the UK and elsewhere that will spook markets, push up long-term interest rates and raise the spectre of sovereign default by countries not belonging to the group of usual suspects. Yes we can! I hope we won’t."

Interestingly, the only institution Buiter thinks is kind of doing its job is the Federal Reserve.

"3) Bruce has apparently joined "Up With People." Everything else aside, Bruce was simply too corny for his own good. It was embarrassing. It was the sight of a guy trying too hard and overcompensating for his ill-ease. It's always been said that Bruce shows more restraint than Billy Joel or Meat Loaf but here he's just killing us with show biz overkill. Rock 'n' Roll, as antiquated a notion as it is these days, is supposed to stay apart from Show Biz. This was pure Cheeze-Whiz."

Sunday, February 01, 2009

The Obama administration is chock full of good economists. Larry Summers, Christina Romer, Peter Orzag, and many more. But yet the stimulus bill seems to be largely written by the House Democrats and, as I have noted, is perhaps more porkulus than stimulus. Money is going to favored groups/causes, money is not being disbursed rapidly, and protectionist clauses seem to be multiplying.

Now before Dirty Davey writes in to tell me that, in the US, it's Congress that makes the laws, let me say that of course it's Congress writes legislation. But Obama has the honeymoon and the sky high approval ratings while Congress as an institution is still held in fairly low repute by the public.

So I see this (so far at least) as an Obama abdication on the first big thing coming out of Washington since his election, and a sobering portent of what government by Pelosi might look like.

People, what do you think? Does Obama have no real influence on his party in Congress? Or is this the bill he wants? Do you think Summers or Romer (or both) are happy with this bill?

My boy Rafa, beat Mrs. Angus' favorite Roger Federer in a tense 5 set battle to win the Australian Open. This clearly cements Rafa as the best player in the world and it kept Federer from tying Pete Sampras' record of 14 slams.

No matter who you root for people, this is as good as it gets. This is Borg- McEnroe type stuff. Repeated epic matches on the biggest stages of the sport.